When creating a company, with the heap of bureaucratic procedures that must be fulfilled, it is likely that not enough importance is given to a series of legal aspects in which the new company is involved and that may affect its subsequent development.
Sometimes it is due to ignorance of the entrepreneur (a euphemism that is often used to hide the negligence in informing by the Administration), in others due to the latter’s own disinterest in spending valuable time on these issues, the fact is that in the start-up of a company and its subsequent development, a series of legal obligations are acquired about which it is convenient, at least, to have an idea.
Constitution Of A Company
Table of Contents
Creating a company often means establishing a mercantile company. The tangled system of procedures for the creation of this company is a reflection of the legal fact of the creation of a mercantile company with its own personality, and therefore, with rights and obligations towards third parties.
Commercial Aspects
A commercial company must be formally incorporated to acquire legal personality. This implies the formalization, among other procedures, of a deed of incorporation according to the regulations contained in different legal texts.
Permits And Registrations
In addition to the procedures to create a company, it will be normal to be obliged to register in certain registers or request the granting of certain permits to start or carry out an activity.
At this point, the greatest difficulty lies in finding out what permits to obtain from the State -and its Ministries-, Autonomous Communities, Town Halls, etc.
One of these registries is the Mercantile Registry, where not only will it be mandatory to register the company in its foundation, but the official books must regularly be submitted for its legalization.
Limited Liability
In most of the corporate forms that are used to create a company, there is a limitation on the liability of the partners for the contributions they have made.
However, for practical purposes, in the event of having to request credits or other types of operations, it is normal for the partners to personally guarantee these operations.
This is important because the problems that may arise in the company will automatically be transferred to the assets of the partners.
Labor Relations
The company, sooner or later, must hire third parties for the development of its activity. Then Labor Law appears on the scene to which the company is also subject in relation to its workers.
Employment Contracts
By definition, any company-employee relationship is subject to an employment contract (if this does not exist, it is considered verbal and indefinite).
In addition, labor regulations may force the registration of these employment contracts and compliance with a host of procedures. Since in case of discrepancies, the Law explicitly favors the employee to the detriment of the company, it is convenient to be very clear about the obligations that are acquired in this regard.
It is important to know that labor regulations not only imply obligations for the company and rights for the worker but also vice versa. Correct information in this sense is the best way to avoid difficult situations later.
Collective Agreements
It is not enough just to agree with a worker. It is possible that the company is subject to the decisions adopted in collective bargaining and formulated in the so-called collective agreements.
Thus, if a company carries out its activity in a certain sector, it may be regulated by an agreement that establishes rules other than the general norm (usually more specific and favorable to the worker).
Collective Agreements
It is not enough just to agree with a worker. It is possible that the company is subject to the decisions adopted in collective bargaining and formulated in the so-called collective agreements.
Thus, if a company carries out its activity in a certain sector, it may be regulated by an agreement that establishes rules other than the general norm (usually more specific and favorable to the worker).
Business Relationships
In the development of the economic activity of the company, it will be related to two other “actors”: its customers and its suppliers. In order to guarantee a minimum of protection to all parties, rules, and laws have been developed to which commercial operations will be subject.
Customers
The usual operations of the company are regulated by the rules of the Commercial Code and other commercial legislation.
In most operations, good faith between the parties is the best way to do things, but this is not an obstacle to knowing the commitments that are acquired in the sale of products or provision of services: information, guarantees, means of payment, etc They are all aspects that contain legal obligations and rights that should be known.
A special type of customer is consumers. The regulations to protect the consumer from abuses imply a series of obligations to the company whose non-compliance can cause many headaches in case of problems.
Suppliers
Given that we are the clients of the suppliers, it is logical that the same previous considerations are applicable in dealing with suppliers.
A special type of provider is banks (in the ‘n’ forms in which they appear). Banks tend to abuse their position of strength and often force the new company to accept legal conditions that are totally detrimental to it. It is convenient to be very attentive to the agreements that are reached with these entities.
The State
Another important “actor” that the new company will encounter is the state. Legal relations with the State are complex, especially when they are judge and party when drafting laws and “imposing” taxes.
Tax Authorities
The Public Treasury has a purpose to collect taxes. To do this, it issues a complex tax regulation to which companies are bound. In addition to the corresponding tax settlements (which the company must carry out accepting the cost that this implies), the Treasury also requires the submission of information relating to third parties (customers, suppliers, employees, etc.) to facilitate their tax control tasks.
Other Agencies
Other state agencies, such as Social Security, may impose obligations and issue legal provisions to which the company is subject. The complexity of these regulations does not exempt them from compliance, which is why many times there is no other choice but to place themselves in the hands of professionals to comply with the legal obligations of these organizations.
Other Types Of Questions
The above list, far from being complete, reveals the enormous number of legal relationships that are established in a company in the development of its ordinary activity.
Insurance
In certain professions, it is advisable to take out insurance to attend to the thousand and one contingencies that may arise in business activity: civil liability, freight transport, credit risks, etc.
International Trade
International trade further complicates legal issues by having to deal with more than one country’s legislation. Impediments to re-export merchandise to a specific country, double taxation problems, customs procedures, etc. are aspects to take into account when wanting to do business abroad.
Settlement
And as if that were not enough, in the case of deciding to close the company for whatever reason, these legal obligations and some new ones continue to exist.
It is not enough to “close the door” and disappear, but rather the company’s liquidation process must be carried out, taking care of all the commitments acquired with employees, clients, and suppliers.
Otherwise, those responsible for the company may be directly responsible for these obligations.
In short, there are many legal aspects in which we will be involved when creating the company. Therefore, it is convenient not to lose sight of them and always look askance to notice what are the legal implications that we incur as we develop the business.
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